Forex Trade Idea: GBP/CAD Bullish Pennant

As I mentioned in my blog entry last week, I had been hoping to catch the Loonie forex selloff after the BOC decided to cut interest rates. Here’s what I’m looking at on GBP/CAD.

After the pair staged a strong rally during the BOC interest rate statement, price consolidated inside a tight 100-pip range. This indicates that forex market participants are probably waiting for more catalysts before pushing the pair higher, and the upcoming BOE minutes release could spur more gains.

GBP/CAD 1-hour Forex Chart

GBP/CAD 1-hour Forex Chart

As Forex Gump mentioned, some BOE MPC members probably renewed their hawkish bias and rate hike calls in their latest policy meeting since the U.K. economy has been churning out impressive economic figures. Aside from that, Thursday’s U.K. retail sales release is expected to show a 0.4% rise in consumer spending for June, with stellar wage growth figures hinting at a potential upside surprise.

Canada is also set to print its retail sales report on Thursday, and analysts are expecting to see a 0.4% increase in the headline figure and a 0.7% rise for the core version. However, the country’s wholesale sales report for the same month came in much weaker than expected with a 1.0% decline versus the projected 0.1% uptick, signaling a potential disappointment.

I’m thinking of setting a long order above the current consolidation around 2.0300 with a stop below the range around 2.0100. Based on the previous rally, an upside break could result to as much as 350-400 pips in gains so I’ll be aiming for this amount with my profit target. What do you think?

Cheers,

Happy time

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